Corn and Bean Crops not as Large as Feared

Corn and soybean exports are improving and the most bullish trade expectations for improved yields at total production did not pan out, according to numbers released by USDA in the November World Agricultural Supply and Demand Estimates (WASDE).

"The market was anticipating a sizeable increase in corn yield and that’s what it got," says Mike Krueger, president of the Money Farm, Fargo, N.D. Krueger was the commentator on a post-report MGEX press conference call.

USDA raised its projected corn production to a record 13.989 billion bushels from its September estimate of 13.843 billion bushels. USDA did not release an October WASDE report due to the partial government shutdown. The current estimate is 29% above last year’s 10.78 billion bushels but smaller than the average trade estimate of just over 14 billion bushels.

The increase in projected corn production is due to a higher estimated corn yield of 160.4 bushels per acre, up from USDA’s September estimate of 155.3 bushels per acre. USDA’s projected corn yield is also higher than the average trade estimate of 158.9 bushels per ace. The department also lowered harvested acreage by 1.9 million acres to 87.2 million from September’s 89.1 million acres.

"You can’t say the ending stocks number for corn bullish, but it is not barely as bearish as some expected," says Krueger. "Some thought corn would drop to $4 if the numbers approached the high end of expectations, which did not happen."

The estimated corn carryout of 1.887 billion bushels was raised from September’s 1.855 billion bushels but came in 7% below the average trade guess of 2.029 billion bushels. The estimated carryout has more than doubled from last year’s 823 million bushels.

Not as Many Beans as Expected

"Most of the excitement came from the soybean numbers," says Krueger. Shortly after the report was released, the January soybean contract rose 29 cents.

USDA raised its estimate for soybean production to 3.258 million bushels from September’s 3.149 billion bushels. The current estimate is nearly 8% above last year’s 3.015 billion bushels but still slightly lower than the average trade estimate of 3.22 billion bushels.

The increase in projected soybean production is due to an increase in the estimated yield of 43 bushels per acre, up from USDA’s September estimate of 41.2 bushels per acre. The new estimated soybean yield is also higher than the average trade estimate of 42.4 bushels per ace. USDA lowered harvested acreage for soybeans by 700,000 acres from its September estimate of 76.1 million acres to 75.7 million. USDA raised soybean exports by 80 million bushels.

"There are 33.2 million tons of soybean sales on the books, compared with 26 million last year, and 21.1 million are to China, compared to 16 million last year," says Krueger. "Demand for soybeans has not slowed down at all."

The estimated carryout for soybeans of 170 million bushels was also raised from September’s 150 million bushels but was still 2 million bushels lower than the average trade guess. This year’s projected carryout is still more than 20% smaller than USDA’s November estimate.